The pandemic has taken a toll on the collective financial situation of the nation. A lot of us are struggling to make our way out of this crisis. However, furloughs, wage cuts and terminations are making it tougher to cope with the situation. It is crucial to safeguard your savings during challenging times like these.
If you’re experiencing a brief cash crunch and there are some expenses lined up ahead, a small loan can help you tide over. You can repay a small loan via affordable monthly instalments over a fixed duration. So, instead of paying a lump sum upfront, you can use the proceeds from a small loan to cover the costs while paying off the loan over easy instalments.
This article explores the concept of small loans and how to apply for a small loan online. Find out how you can use a small business loan to finance business expenses.
What are small loans?
Small loans are short-term personal loans designed to help you deal with small expenses – car repair, medical bills, household cash crunch, and small-scale home improvement expenses. The typical loan amount for a small loan doesn’t exceed £2000. A small loan amount makes monthly instalments more affordable, depending on the tenure that you choose for your loan.
Small loans tend to have a higher interest rate than typical personal loans. But your credit score determines the rates that lenders will offer you. Your credit score is an integral aspect of your financial standing. Lenders assess their risk of lending based on your credit score. Therefore, a good credit score opens more doors for you, amplifying your chances of qualifying for competitive rates. On the other hand, a bad credit score is a risky proposition for the lender, so they set a higher interest rate.
Since the loan amount is small, the disbursal is usually quick. You can use the funds at your discretion, albeit responsibly. Small loans can be an opportunity for you to boost your credit score. Making timely repayments will help you jump up the credit ladder. A good way to ensure timely repayments is by setting a direct debit for your monthly instalments.
Repayments are critical to your credit score. Lenders report your entire repayment history to credit bureaus. Where each timely repayment boosts your score, each missed repayment stays on your report as a negative item, damaging your credit score. If you miss too many repayments, the lender may summon you to court and get a County Court Judgement issued against you. A CCJ stays on your credit file for a longer time, hampering your chances of securing credit in the future. This could keep you from fulfilling your life goals. Thus, it is vital to make your payments on time.
Can I borrow small loans for bad credit?
Finding a suitable loan offer with a below-average credit rating can be challenging. You can undoubtedly apply for small loans even with a bad credit score. However, you may not be able to qualify for competitive interest rates.
Bad credit shouldn’t hold you back from financial opportunities or seeking financial aid. Loan Broker is an FCA approved broker in the UK. We provide our customers with personalised loan offers as per their credit score and financial circumstances. Our panel of FCA-approved lenders cater to a variety of credit ratings. Compare loan offers from multiple lenders to find your ideal loan.
Can I borrow a small business loan (UK)?
Businesses may require certain investments from time to time. It could be for inventory management, purchasing new and advanced equipment, technical paraphernalia, or simply regulating cash flow for daily operational costs.
Depending on your business’ standing, you can either choose a secured or an unsecured business loan. An unsecured business loan gives you access to funds without collateral. However, the owner or director of the business is legally bound to guarantee repayments personally.
On the other hand, you can borrow a secured business loan by declaring your business assets as security against the loan. You can use your business equipment or property as collaterals against this loan. If you happen to default, the lender will repossess and sell these assets to recover their loss.
How to apply for small loans (UK)?
- Figure out a suitable loan amount: Evaluate your income and expenses to work out a suitable loan amount. Choose an amount that you can easily afford to repay in the long run.
- Assess your credit rating: Assessing your credit score will give you an insight into the kind of offers you can expect based on your score. Plus, a planned credit check will buy you time to boost your credit score before applying. You will also have enough time to dispute any incorrect items or unidentified enquiries into your profile.
- Complete your application: Online application forms are usually quicker and more convenient since you can apply from any location. Pay attention to each detail while filling your application form – your details, information about the loan, such as the loan amount and tenure. At Loan Broker, we understand how cumbersome it is to fill lengthy application forms. Our optimal form design allows us to get to know you quickly through apt data points.
- Carefully compare loan offers: Once you submit your details, the lender will process your application to offer you pre-approved deals based on a soft check. After you choose a suitable offer, the lender will run a hard enquiry into your profile. Loan Broker provides a variety of personalised loan offers based on your credit rating and financial circumstances.
- Complete agreement formalities: Once your loan is processed, you and the lender must complete some contractual formalities mutually. It is important to thoroughly go through your agreement and read the fine print cautiously.
- Disbursal via wire transfer: After you complete the legal formalities, the lender will disburse the loan amount into your bank account via wire transfer. It may take a few hours or days for the transaction to complete, depending on the service of your bank account provider. It is in your best interest to use these funds responsibly.
- Abide by your repayment plan: All timely payments help you push your credit score higher up. Stay prepared for contingencies. What if you lose your source of income? Will you still be able to pay off this loan? A backup plan to ensure timely repayments in such situations will help you in the long run.
Where can I find quick small loans?
Loan Broker is an FCA approved loan comparison platform to help you find your ideal loan offer. Our FCA authorised panel of lenders offer loans to people with bad credit. Fill out a quick application form and compare from a variety of offers to find a suitable loan.
Small loans can help you finance more minor expenses through affordable monthly instalments. Keep in mind that lenders charge interest over the entire tenure of a loan. Therefore, it is in your best interest to pay off a loan as soon as possible.